Entries in Internal Revenue Service (9)


Tax Return Theft: How to Safeguard Your Refund

iStockphoto/Thinkstock(NEW YORK) -- It is a day dreaded by most Americans, the day taxes are due, but for hundreds of thousands of taxpayers it’s just the beginning of a nightmare where they discover Social Security numbers have been stolen and fake returns filed in their name.

Tax-related identity theft is an exploding problem. The Internal Revenue Service paid out $1.4 billion in fraudulent tax refunds last year to identity thieves who filed false returns, six times more than in 2010.

Experts say the fraud is attractive to scam artists because people are unaware they have been scammed until their tax return is rejected.

The fraud is perpetrated in three ways:

  1. A crook files a tax return using your name and Social Security number before you file your own.
  2. A crook uses your Social Security number when hired for a job and the income from that job shows up as yours.
  3. A crook steals the Social Security number of a child or elderly dependent of yours and claims them.

In order to minimize the likelihood of becoming a victim of identity theft the IRS has these recommendations:

  • Don’t carry your Social Security card or any document with your Social Security number on it.
  • Don’t give a business your Social Security number just because they ask for it. Only give it when it is required.
  • Check your credit report every 12 months.
  • Secure personal information in your home and on your computer.
  • Don’t give personal information over the phone or the Internet unless you initiated the contact or are sure you know who you are dealing with.

If you believe you are a victim of tax-related identity theft, here’s what you should do:

  • File a report with the Federal Trade Commission’s Identity Theft database.
  • Call the FTC’s hotline for individual ID theft counseling: 1-877-ID-THEFT
  • Place fraud alerts on your credit reports at, and
  • Contact the IRS Identity Protection Specialized Unit, toll-free at 800-908-4490.
  • Visit the IRS Taxpayer Advocate Service, which has a helpful toolkit, here.
  • Fill out the IRS Identity Theft Affidavit, Form 14039.

Copyright 2012 ABC News Radio


IRS: ‘Where’s My Refund?’ Glitch Won’t Affect Refunds

iStockphoto/Thinkstock(WASHINGTON) -- Though the IRS’s “Where’s My Refund?” tool is temporarily down, a spokeswoman for the Internal Revenue Service says that it will not impact the processing of tax returns or issuing tax refunds.

A spokeswoman said the message indicating technical difficulties has only been up since Wednesday afternoon. It reads: "We’re having some technical difficulties right now but expect to have this resolved soon. We apologize for the inconvenience.”

She said she could not comment about the cause of the glitch.

A second, unrelated, message on the website has been on the site since Friday. It reads:

Update: We are aware that some taxpayers who have filed electronically and received an acknowledgement from the IRS are concerned when they visit “Where’s My Refund” and are told that we have no information regarding their return. This is a temporary situation, and we expect to resolve the matter in a few days. At that time, taxpayers will be able to get an expected refund date when they visit “Where’s My Refund.”

That the technical difficulties will not impact processing will be a relief to those (generally those who are poor) who have filed early in the hope of receiving a large refund, said Timothy Flacke, executive director of the nonprofit group Doorways to Dreams (D2D) Fund.

He said tax filers who qualify for the earned income tax credit, or EITC, typically are aware they will receive large refunds and rush to complete their returns in late January or early February.

“Whether it’s $2,000 or $3,000, they have a sense a windfall is coming,” he said. “Whereas middle America thinks tax time is a pain, lower-income communities look forward to it.”

Flacke said that in these communities, even before Jan. 1, tax preparers begin marketing their services, so they can be used as early as possible.

Based in Allston, Mass., D2D Fund makes financial products for low and moderate income consumers and raises awareness to encourage Americans to invest a part of their tax return without fees through The Tax Time Savings Bond Campaign.

About 45,000 Americans have saved $11 million in U.S. Savings Bonds with a portion of their tax refund, for an average of $244 per family, according to the D2D Fund.

There were more than 112 million individual income tax returns filed through e-file last year, according to the IRS, an increase of 13.6 percent over the previous year.

Copyright 2012 ABC News Radio


Tax Refunds Delayed for Early Filers This Year

Ryan McVay/Photodisc/Thinkstock(WASHINGTON) -- If you're one of the people who already filed your tax returns in the hopes of getting a refund back fast, Uncle Sam has some disappointing news for you.

The Internal Revenue Service says some taxpayers may have to wait a week longer than initially projected to get their money back as it works on tweaking its computer systems to prevent refund fraud.

"The one-week delay for some refunds relates to fine-tuning IRS systems to adjust for new safeguards put in place this tax season to provide stronger protection against refund fraud.  The IRS is providing additional screening for fraud this year before issuing refunds, but the vast majority of taxpayers can still continue to expect to receive their refunds in a timely fashion," the IRS said in an alert.

The delay affects taxpayers who filed returns before Jan. 26, IRS spokeswoman Michelle Eldridge told USA Today.

Copyright 2012 ABC News Radio


Obama’s Aides, Other Government Workers Owe Millions in Back Taxes

Comstock Images/Thinkstock(WASHINGTON) -- President Obama has repeatedly called on the rich to pay more taxes to help lower the deficit, but the The Internal Revenue Service (IRS) has revealed he needs to start looking closer to home for extra tax revenue.

A few dozen people who work for Obama are having some trouble paying their taxes -- not counting Treasury Secretary Tim Geithner, whose tax delinquencies are already well documented.

The Internal Revenue Service (IRS) has released its Federal Employee and Retiree Delinquency Inventory, and it shows that 36 of Obama’s aides owe a total of $833,970 in back taxes.

Other government employees owe a lot, too.  At the Environmental Protection Agency, 413 people owe more than $19 million; at the Federal Deposit Insurance Corp., which is supposed to “maintain stability and public confidence in the nation’s financial system,” 185 employees owe more than $3 million; and five people at the U.S. Tax Court owe $62,508.

Copyright 2012 ABC News Radio


IRS Gives Taxpayers Two-Day Extension to File Returns

iStockphoto/Thinkstock(WASHINGTON) -- The Internal Revenue Service officially kicked off the 2012 tax filing season on Wednesday, and this year, taxpayers are in store for a federal tax holiday of sorts -- a two-day extension to file their 2011 tax returns.

Tax Day will be moved up to April 17, given that the usual April 15 deadline falls on a Sunday this year and the following day is Emancipation Day, a holiday observed in the District of Columbia.

As the IRS explains, "According to federal law, District of Columbia holidays impact tax deadlines in the same way that federal holidays do; therefore, all taxpayers will have two extra days to file this year."

The agency expects to receive more than 144 million individual tax returns in 2012.  Taxpayers can begin submitting their e-file and Free File returns on Jan. 17.

Copyright 2012 ABC News Radio


IRS: 12,000 Tax Cheats Have Come Forward

Comstock Images/Thinkstock(WASHINGTON) -- At least 12,000 tax cheats with offshore accounts have come forward under an amnesty program that just ended, coughing up $500 million in interest, the IRS says.

“The recently completed offshore program pushed the total number of voluntary disclosures up to 30,000 since 2009,” the agency said in a statement.

The 2009 program raised $2.2 billion, but the latest amnesty has yet to collect penalties, which will add hundreds of millions more to the total.

“By any measure, we are in the middle of an unprecedented period for our global international tax enforcement efforts,” IRS Commissioner Doug Shulman said in a statement.  “We have pierced international bank secrecy laws, and we are making a serious dent in offshore tax evasion.”

The IRS and the Justice Department have been strong-arming banks worldwide to give up names of their U.S. clients who have offshore accounts, especially banks that do business here.  Swiss bank UBS signed a deal two years ago with the United States on offshore accounts and paid $780 million.

Clients of UBS and other banks are also being prosecuted, although the IRS hasn’t released any details of the efforts.  Reports indicate that perhaps a dozen banks might be prosecuted for tens of thousands of secret accounts held by U.S. citizens.

News of the deals with foreign banks likely led to so many people coming forward under this second program, avoiding criminal charges.

According to the IRS statement Thursday, new figures showed that from the 2009 offshore program, the IRS has $2.2 billion in hand from taxes, interest and penalties, representing about 80 percent of the 2009 cases that have closed.  The cases covered bank accounts in 140 countries.

“This dollar figure will grow in the months ahead,” Shulman said.  “But just as importantly, we have changed the risk calculus.  Americans now understand that if they try to hide assets overseas, the chances of being caught continue to increase.”

It’s unclear whether the agency will offer a third program for tax cheats to come clean.

Copyright 2011 ABC News Radio


Ticket Tax Expires, But Airlines Raise Prices, Punt to IRS on Refunds

John Foxx/Thinkstock(WASHINGTON) -- Airlines seem to be taking an "it's not our problem" approach to refunding passengers for taxes that are no longer authorized to be collected after Congress failed to pass legislation funding the Federal Aviation Administration.

Thus far, only one major airline has announced it will directly offer a refund of the 7.5 percent excise tax and a per-segment flat fee.  On a $500 round-trip connecting ticket, a customer would be due $42.30.  If the flight leaves the U.S., add another $32.60 for a total of $74.90.

After the midnight Friday deadline passed for re-authorization of the FAA, almost 4,000 FAA employees have reportedly been furloughed and federal air transportation excise taxes have expired.

The Internal Revenue Service clarified on Wednesday that tickets purchased on or before July 22 for travel on or after July 23 may be entitled to the tax refund.

Jetblue is the only major airline accepting requests for ticket tax refunds.  A message on its website instructs customers who are flying within the next seven days to contact the company while all others should check back at a later time.  Other major airlines are directing customers to the IRS.

The IRS' announcement came after the major airlines acknowledged they increased their fares concurrent with the expired taxes, preventing fliers from reaping any savings on tickets purchased on or after July 23.  Virgin America used the so-called "tax holiday" for an email marketing campaign on July 23 despite reportedly increasing its fares in lockstep with the other airlines.

That Virgin America email marketing campaign stated, "Take a tax holiday. Grab a seat with fewer federal taxes for a limited time only."

Virgin America said it immediately passed on the exact equivalent discount as soon as the expiration happened at 11:59pm on Friday night through Sunday night and promoted the discount to guests during that time.

"But, given the dynamic nature of fares, with the Monday morning fare changes, some fares held the discount, some went up and some went down," Abby Lunardini, Virgin America spokeswoman, said.

Sen. Jay Rockefeller IV, D-W. VA, chairman of the committee on commerce, science and transportation, and Sen. Maria Cantwell, D-Wash., aviation operations, safety and security subcommittee chairwoman, wrote a letter on Tuesday to the Air Transport Association (ATA) chairman, Richard Anderson, who is also the CEO of Delta Airlines, saying they were "deeply perplexed by the industry's pocketing of passenger tax revenue."

"Most of ATA members have elected not to pass the savings along to consumers through reduced ticket prices, but rather have decided to increase the base fare of airline tickets," the Senators wrote.  "We urge the nation's airlines to put all of the profits that they are making from the lapse of the aviation taxes into an escrow account so that they can be transferred back into the Airport and Airway Trust Fund when Congress reinstates the taxes."

Despite the request from the tax agency and the Senators, most airlines are directing customers to the IRS to request a refund.  The IRS said that "passengers who are unable to obtain a refund from the airline may obtain a refund by submitting a claim to the IRS."

Copyright 2011 ABC News Radio


Will Baseball Fan Have to Pay Up for Returning Jeter's 3,000th Hit Ball?

Jeffrey Hamilton/Photodisc/Thinkstock(NEW YORK) -- When Christian Lopez returned the home run ball that represented Derek Jeter's 3,000th hit last Saturday, the New York Yankees showered Lopez with tickets and autographed memorabilia as a sign of the team's appreciation.

But come Tax Day 2012, the 23-year-old baseball fan may see those gifts as a burden if he gets stuck with a bill from the Internal Revenue Service.

Tax experts told The New York Times that Lopez would have to declare as income everything the Yankees gave him for the historic ball.  This includes free tickets for the remainder of the 2011 regular season, as well as for any postseason games; and three bats, three baseballs and two jerseys all autographed by Jeter.

The tickets alone are estimated to be worth between $44,800 and $73,600, according to the Yankees' website.

If the gifts were valued at just $50,000, Lopez would be forced to pay about $14,000 in taxes, a tax expert told the newspaper.

The IRS declined to speculate whether Uncle Sam would come after the baseball fan.

Copyright 2011 ABC News Radio


Tax Tip: Save the Stress, Hire a Tax Preparer

Photo Courtesy - Getty Images(NEW YORK) -- Choosing the right tax preparer could save you time and money.

Six in 10 Americans use the help of a preparer come tax season, according to the IRS, but Kiplinger’s Mary Beth Franklin says that most people can do it themselves if they have a straightforward return.

H&R Block’s Kathy Pickering says it often comes down to time.

“Even if they feel like they can do their taxes, they just don’t want to take the time, they don’t want to be bothered with the hassle factor,” Pickering said.

When choosing a tax preparer, make sure they have an IRS tax identification number. Jodie Reynolds of the Internal Revenue Service also suggests having the preparer sign your tax returns with that number.

“You’ll want to find out what their service fees are because if you go to a preparer that’s going to base their fee on a percentage of your refund, that should be a red flag,” Reynolds said.

Copyright 2011 ABC News Radio

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